The North Korean economy is believed to have marginally grown last year after contracting for two straight years on increased agricultural production, South Korea's central bank said Sunday.

The Bank of Korea (BOK) estimated that the communist country's economy grew 0.8 percent on-year in 2011, compared with a 0.5 percent contraction a year earlier. The 2011 data contrasted with a 3.6 percent expansion of the South Korean economy.

The South Korean central bank had earlier estimated that the North's economy shrank for two years in a row. In 2009, it fell 0.9 percent, according to the bank.

"Despite contraction in the manufacturing sector, the North's economy grew last year as agricultural production rose, aided by favorable weather conditions and a rise in the use of fertilizer," said Park Yung-hwan, an economist at the BOK.

The BOK annually releases the economic growth estimate of the North based on data provided by Seoul's intelligence agency and other institutes specializing in North Korean studies.

The North Korean economy has been in doldrums as it suffers from chronic food and energy shortages, mismanagement and natural disasters. The communist state has relied on international handouts since 1995 to help feed its 23 million people.

The North's agricultural and fishery industry grew 5.3 percent on-year in 2011, a turnaround from a 2.1 percent contraction the previous year, the bank report said. Its manufacturing sector declined 3 percent last year after falling 0.3 percent in 2010.

North Korea's nominal gross national income (GNI) amounted to

32.4 trillion won (US$28.5 billion) last year, which is equivalent of 2.6 percent of South Korea's 2011 GNI of 1,241 trillion won, the bank said.

Park said shipments of goods produced at a joint industrial complex at the North's border city of Kaesong accounted for most inter-Korean trade last year. Chilly inter-Korean relations and punitive international sanctions cut off the flow of humanitarian aid to the North, he said.

The value of North Korean products shipped to South Korea declined 12.5 percent, while South Korean shipments to the North fell 7.8 percent, the BOK added. (Yonhap News)